View full sizeMark Cox and his wife Kim Kelly are glad to have finally purchased their home in Cleveland Glenville neighborhood after having rented it for 15 years.Peggy Turbett, The Plain Dealer

CLEVELAND, Ohio -- A bailout of two rent-to-own programs will allow more than 90 low-income families to buy their houses in Cleveland's Glenville neighborhood, according to the Cleveland Housing Network.

The housing advocacy agency has led a rescue that included buying mortgages and paying back taxes and penalties to keep the houses out of foreclosure and in the programs, said Rob Curry, the agency's executive director.

"They're totally back from the edge," Curry said Monday.

The programs date to the 1990s, when investor-backed partnerships built and leased the houses to low-income families with provisions allowing the renters to buy at below-market prices after 15 years.

Most of the money to build the houses came from large corporations wanting to invest in low-income housing in return for substantial federal tax credits.

But problems surfaced two years ago, when some renters looking to buy their houses discovered that the partnerships' management company had for years failed to pay property taxes.

In April, 2011, Huntington National Bank moved to foreclose on a loan to one of the partnerships, Northeastern Neighborhood Homes Limited Partnership II, because more than $95,000 in taxes and penalties going back to 2007 had not been paid.

Hallmark Management Realty had been hired to collect rents and the pay taxes, but owner Roger Saffold said in a 2011 interview that not enough money was being collected to pay the taxes after paying the mortgages and making repairs.

He blamed the problem on the recession and vandalism in the blighted neighborhood that caused a lot of turnover in the homes.

In launching a rescue effort, the Cleveland Housing Network and Neighborhood Progress Inc. negotiated to buy the mortgages, held by Huntington and Chicago-based Urban Partnership Bank, at discounted prices.

That way the homes could be sold at affordable prices and still generate enough revenue to pay off the loans, Curry said.

Carrie Rosenfelt, community development relationship manager at Huntington Bank, said Huntington sold its mortgage at a discount because of the Cleveland Housing Network's experience working with rent-to-own programs.

The housing network also lined up the nonprofit Neighborhood Housing Services of Greater Cleveland to make loans to renters looking to buy their houses, Curry said. Those buyers also receive counseling and help completing the necessary documentation.

About 60 of the 93 houses in the programs are occupied, and the housing network will soon be looking for rent-to-buy candidates for the remaining houses. Seven homes sold in December, and another two are slated to close in March.

The first couple to make a deal were Mark Cox and his wife Kim Kelly, who bought their four-bedroom house on East 125th for $25,500, ending months of worrying about the prospect of losing their home to foreclosure.

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